How Does the Budget Affect Families?

Chancellor George Osborne today unveiled the first solely Conservative budget since 1996 and there were plenty of announcements that will affect family life. With £12 billion taken off the welfare bill, are the ‘hard working’ families every politician seems keen to court going to be worse off?

The threshold for claiming tax credits has been savaged, from £6,420 down to £3,850 and families who have a third child after April 2017 will no longer eligible for the benefit for any child after their second. The same goes for the Universal Credit.

The BBC reckons that one in five families currently claiming tax credit have three or more children, and although this move only applies to third offspring born after April 2017, that’s a significant chunk of the 870,000 claimants.

A national living wage will be introduced, starting at £7.20 an hour from April 2017, rising to £9 an hour in 2020. However, the cuts to the tax credits threshold may neutralise this policy and critics are concerned that small businesses may have to make workers part time or work under zero-hours contracts because they can’t afford to pay it.

New inheritance tax laws mean that, after April 2020, married couples or those in civil partnerships should be able to leave property worth up to £1 million to their children tax free, which is a decent mansion in Yorkshire and approximately half a shed in London.

University students from the poorest families will no longer receive a grant as has been the case up to now. From the 2016-17 academic year, they will instead have to take out student loans of up to £8,200, which must be paid back once they start earning over £21,000.

Osborne surprised many by boosting Insurance Premium Tax. The rate you pay on your monthly premiums for any insurance policy will rise to 9.5 percent, from 6 percent. The British Insurance Brokers’ Association has slammed the move, reckoning that it will affect tens of millions of families. Imagine what that means if you’ve agreed to pay the premiums for your 17 year old’s motor insurance. Ouch!